DoT to invoke bank guarantees to recover RCom’s spectrum dues

The last day of payment of Rs 21 crore was March 13, which included a grace period of 10 days.

RCom shut its wireless services in late 2017 under severe financial pressure and is racing to pay Rs 453 crore owed to Sweden’s Ericsson by March 19

New Delhi: The Department of Telecommunications (DoT) is invoking bank guarantees to recover Reliance Communications’ (RCom) latest spectrum dues and is set to issue a notice asking why the airwaves shouldn’t be withdrawn, adding to the woes of the telco whose chairman Anil Ambani faces jail for not paying a vendor.

“The last day of payment of Rs 21 crore was March 13, which included a grace period of 10 days. We have now asked the related department to send a show-cause notice to the telco,” a DoT official said. A telco is allowed 20 days to respond to a show-cause notice.

Failure to pay the government may ultimately lead to withdrawal of spectrum against which payment was due, the official said. In this case, it is the 800 MHz band in Mumbai, purchased in 2015 and used by Reliance Jio Infocomm under a spectrum sharing pact with RCom.

“If their spectrum is withdrawn, there will be no airwaves to sell or trade for RCom,” said the official, who did not want to be identified.

According to officials, RCom, weighed by debt of over Rs 40,000 crore, is due to pay another instalment of Rs 281 crore in April for spectrum in the 800 MHz band bought from Sistema Shyam Teleservices in eight circles.

RCom shut its wireless services in late 2017 under severe financial pressure and is racing to pay Rs 453 crore owed to Sweden’s Ericsson by March 19, failing which chairman Ambani will go to jail for three months, as directed by the Supreme Court.

Another DoT official said spectrum payments are sacrosanct. “Irrespective of the amount, once the grace period is over we will have to take action. You cannot buy spectrum and not pay the government for it,” the official said.

Bharti Airtel, Vodafone Idea and Jio had paid their dues to the government in March for spectrum bought in 2015. RCom did not respond to ET’s queries. However, people aware of the development said the government is holding on to additional guarantees of Rs 192 crore which can be used to settle the spectrum dues of Rs 21crore.

The department also has Rs 2,000 crore of bank guarantees of RCom, which it hasn’t returned despite an appellate tribunal’s order, they said.

ET reported earlier that DoT planned to appeal in the Supreme Court against the Telecom Disputes Settlements and Appellate Tribunal’s recent order to return the bank guarantees worth Rs 2,000 crore given by RCom as one-time spectrum charges.

This is not RCom’s first payment default. The telco didn’t initially pay spectrum dues totalling Rs 774 crore that fell due in April 2018. RCom eventually replenished the bank guarantees and averted spectrum cancellation.

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